In a bid to remove a 0.25% federal on all sports betting handle in the US, a new bill has been introduced.
The legislation, titled HR 7790, was introduced by Representatives Dina Titus and Guy Reschenthaler, who are also co-chairs of the Congressional Gaming Cacus.
Federal sports betting handle tax has existed for almost 70 years. Operators eligible to pay this also have to pay an employee tax of $50 per head.
HR 7790 has now been forwarded to the House Ways and Means Committee.
It might be time for change
Federal sports betting handle tax laws were introduced in 1951, with state lotteries exempt from paying it.
In just Nevada, this law generated $13.1 million in taxes for the state last year. However, according to Titus, the Internal Revenue Service (IRS) “couldn’t answer how the money was being used”.
Titus also argued that with sports now returning and numerous jobs in the industry at risk, now is an ideal time to look at getting rid of this tax. She said the following.
“Sports are back. Unfortunately, the penalty on making legal sports bets never left. The handle tax makes it more difficult for legal gaming establishments to compete with illegal operators.
“Repealing it will push more consumers out of the black market and into a well-regulated market. Forcing sportsbooks to pay a per-employee tax is the last thing we need when gaming establishments are still making announcements about new rounds of layoffs and furloughs.”
Is the federal wagering tax law detrimental to legal US sports betting operators?
Titus and Reschenthaler aren’t the only ones who think this particular law is outdated. The American Gaming Association (AGA) have also made their views on this matter clear.
AGA President and Chief Executive Bill Miller has said the following about moving this particular form of tax.
“The federal excise and head taxes levied on legal US sportsbooks generate little meaningful revenue for the government.
“Instead, they place legitimate businesses at a significant competitive disadvantage against illicit gambling operations which skirt taxes and licensing fees.
“Though originally enacted in the 1950s as a tool to curb illegal gambling, these antiquated federal taxes now give illegal operators a leg up.”
Last week, the AGA published research showing that a large number of Americans bet with unregulated operators. This is despite them thinking that said websites were legal.
